Increased bitcoin trading volume and positive chain of data appear to be the primary forces behind BTC’s newfound strength.

Bitcoin becomes available in early 2023

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With bullish indicators at $21,647 a year-to-date high and hopeful that the worst of the bear market is over. The upside of BTC’s bullish price action also leads to Ether

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and Bitcoin mining stocks.

The decline to neutral in the Bitcoin Fear and GRID indices is likely due to increased volume, bitcoin chain data, and the disconnection of BTC prices from the equity market although not all analysts believe the market is bottoming out, let’s dive into the statistics.

Trading volume and volatility returns
Trading volumes have increased dramatically as the price of bitcoin has risen. Over the past week, BTC volume has more than doubled, reaching $10.8 billion, up 114% in seven days.

Bitcoin trading volume. Source Secret Research
Increased turnover is often correlated with increased volatility. While the current 2.4% seven-day volatility level is still below the 2022 seven-day average of 3.1%, in 2023 Bitcoin continues

BTC 30 days and 7 days volatility. Source Secret Research
The centralized exchange (CEX) has been struggling with low trading volumes, meaning low fees for trading, which have led to layoffs. Volume increases for all exchanges will likely be welcome news.

The AI crypto platform received an average of 17 winner alerts per month in 2022
An increase in the volume of trade coincides with a return in profit
Bitcoin On-Chain Realized Profit is re-examining its Adjusted Expense Output Profit Ratio (aSOPR) value of 1.0, which some analysts consider a key resistance level The ASOPR metric historically reflects changes in overall market trajectory as profit is absorbed by trading volume.

BTC aSOPR 7-day exponential moving average. Source: Glassnod
According to Glasnod

“A pause of ASOPR above, and ideally a successful retest of 1.0, has often indicated a meaningful regime change in the realization of benefits, and sufficient demand is flowing in to absorb them.”
Reversing a trend that started in May, BTC’s on-chain realized profit & loss ratio is above the 1.0 level, posting a profit of 1.56 against a loss on 16 January.

When more traders are in the green on BTC purchases and realizing profits without a sharp drop in price, it indicates market strength.

Profit and loss ratio realized for BTC. Source: Glassnod
Chain analysis also positively indicates that Bitcoin’s recovery is potentially on its way. The more it can absorb market pressure without price surrender speaks to overall market fear and potential macro change.

Related: Bitcoin-chain on-chain and technical data starting to show that BTC is at the bottom of the price

The correlation with bitcoin equities has softened
Volatility, realized profitability, and trading volume help bitcoin stand out from equities. As reported by Cointelegraph, bitcoin price action generally follows the U.S. dollar.

Bitcoin’s 30-day correlation with the Nasdaq reached 0.29 on January 17, which is BTC’s largest deviation from the equity since December 2021.

Vetal Lunde, senior analyst at Arcane Research, explains what decoupling means for the bitcoin market.

“The softening of the correlation is a positive development in the market.”
Bitcoin’s previous correlation could be due to institutional investors bundling BTC with other risk assets and exposure holdings of large growth companies like Tesla

Meanwhile, institutional investors and growth companies have fewer bitcoins, and the correlation with the market may decrease in the future.

High inflation resilience can cause equity markets to flutter, but bitcoin’s deviation from the stock market can help BTC become an investment hedge. According to some analysts, if bitcoin can be a hedge for equities, institutional investors may return to the market.

Source: CoinTelegraph